Chris Sarra has used school funds in some unexpected ways to get results. The former principal was named a finalist in the Australian of the Year in 2010, in recognition of his success in dramatically turning around academic performance and attendance rates at Cherbourg State School, in an indigenous community in south-east Queensland.

Much of his well-recognised success was gained through instilling the intrinsic value of education in his students, a ''strong and smart'' philosophy. But the odd carrot helped too.

Promises: Higher spending in schools could help greatly. Photo: iStock

''When I was at Cherbourg there was a student called Marilyn who'd missed more than 50 per cent of school for the first six years of her school life,'' he says. ''We offered an incentive to Marilyn, an incentive we offered to all the kids - if any kid in year six or seven had less than 10 days absent in the whole school year they would get a trip to Melbourne.''

''She missed less than 10 days that year and bought herself a trip to Melbourne.'' Marilyn went on to become a top performing student.

Former Australian of the Year finalist Chris Sarra. Photo: Jeffrey Chan

Sarra is among many in education who have welcomed the ''significant investment'' pledged by Julia Gillard last week, which promises to allow more resources flow to disadvantaged schools. If the states agree, $14.5 billion funding, two-thirds of it from federal coffers, will be delivered over six years.

With all the focus on the raw numbers, many are unsure about how the funding will be used to create better schools and achieve Gillard's goal of putting Australia in the top five ranked countries in international tests by 2025.

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The offer falls well short of the $5 billion a year recommended by the review, and will be phased-in in unknown increments, with most of the funds believed to be slated for later years.

Federal funding will be indexed at 4.7 per cent a year, with state funding indexed at 3 per cent.

The quantum of funds announced has caused disappointment - Sarra included - and has already been derided as ''Gonski lite'' by some.

But most education experts agree it could still make a difference.

It offers opportunities, particularly in poorer, mostly public schools, to make changes that vary in popularity, such as better professional development, bringing in specialist staff, lowering class sizes, buying new technology or boosting teacher pay.

''It certainly will make a very substantial difference, if it's spent on the right things,'' says Ken Boston, a member of the Gonski review panel and former director-general of education in NSW.

Boston is clear on what the right thing is.

''I'm not interested in spending this money on ivy-covered sandstone buildings or on something like introducing 10, 000 whiteboards,'' he says.

''The thing that will really produce reform and change is working with teachers to improve what's happening in the classroom.''

The money will be distributed to schools and systems according to a ''needs-based'' model, as advocated by the Gonski review. Schools will be allocated a base amount for each individual student, with significant loadings for attributes associated with educational disadvantage, such as coming from a low socio-economic background, poor English, living in a remote area or being indigenous.

At an individual school level, the plan means an average of $1.5 million extra a year, or $4000 a student, according to the government. For those schools with large numbers of disadvantaged students, it will mean significantly more.

''[Principals] are looking at a very significant improvement in their resource positions,'' says Professor Richard Teese, Centre for Research on Education Systems director at the University of Melbourne.

There are many creative examples, like the trip to Melbourne offered at Cherbourg, of how schools have used resources to get results.

But Boston's view that the quality of teaching in the classroom should be the priority is widely shared.

''We know that spending on school education has significantly increased in Australia over recent decades, yet there's not a lot of evidence that improvements have occurred, at least in things we measure,'' says Professor Geoff Masters, chief executive officer of the Australian Council for Educational Research.

''It boils down to a question of how the money is spent. All the international research suggests that the most effective way of spending money is spending it in ways that improve quality of teaching and learning in the classroom.''

On this point, the government has set out some obligations.

The extra funding for schools signed up to the plan are tied to the National Plan for School Improvement. The plan lays out an explicit and lengthy set of requirements aimed at achieving better teaching and learning, including annual performance reviews for teachers, giving teachers access to continuing training and more leadership training for principals.

There are new national standards for teacher training, too, outlined earlier this year, such as the requirement that all new teachers be in the top 30 per cent of the population for literacy and numeracy when they graduate.

Brian Croke, executive director of the Catholic Education Commission of NSW, agrees the emphasis on teaching is appropriate - even if, he says, the final goal of Australia reaching the top five ranked nations by 2025 in the plan is too narrow. But it will not be cheap. Achieving these goals will require a good deal of time from senior teachers and principals, school executive staff and others.

''All time costs money,'' he says. The cost of compliance itself could be particularly onerous.

In addition to the obligations set out in the plan, there is enthusiasm for other ways of using the funds to improve teaching in schools.

Ben Jensen, school education program director at the Grattan Institute, says Australia could follow Finland's lead in placing specialist literacy and numeracy teachers in schools to assist teachers and students alike.

''There's not the money [in the first years] to do that for all schools but you could start with those that are most disadvantaged,'' he said. ''Ideally they would take some regular classes, they would mentor other teachers in these areas and then they would provide special instruction for kids as they fall behind.''

According to the federal government, the $1.5 million each school will receive on average a year is enough for two specialist literacy and numeracy coaches.

There is less enthusiasm for using the money to splash out on equipment, or for a uniform reduction in class sizes or uniform rise in teachers' pay.

''A reduction in class size of one or two is not going to have any positive effect on the quality of education,'' Boston says.

But there was some support for targeted uses of the money along these lines.

Croke says targeted financial incentives could be used to encourage more experienced teachers to work in rural or remote communities. Others have suggested creating higher paid positions of highly effective or master teachers.

Reducing class sizes, particularly for younger, disadvantaged children, is also favoured by some.

Kathy Deacon is principal at Villawood East Public School in Western Sydney. It has used special government funding over the last four years for a range of initiatives, including reducing the size of its kindergarten to year two classes by an average of four students. ''The students are able to have more individual attention,'' she says.

''Many of these students come to school without any prior learning … many have never held a book before.''

Being able to purchase new equipment such as iPads had also helped engage children with learning difficulties, she says, as the children tend to have more visual ways of learning.

''Children from poorer backgrounds should have access to this technology too,'' she says.

For schools like Cherbourg, where students are almost exclusively indigenous, Chris Sarra encourages employing non-teaching specialist staff, such as someone to liaise with the community in order to improve student engagement.

''I know this is a strategy that works,'' he says. ''Sometimes families can be intimidated by people from schools and sometimes teachers and principals are intimidated by families.''

He credits this strategy as among those that helped lift attendance rates at Cherbourg from 62 to 94 per cent.

Gillard's rhetoric has been that schools will get to decide how the money should best be spent, but some uncertainty persists.

Sectors, such as the Catholic system or state governments, will continue to administer the funding to their own schools, and the level of autonomy schools have will vary between sectors and states. The plan states principals should be given more autonomy over how they run their schools, including budgets, and that the funding must be distributed using the same loadings and according to need.

The June 30 deadline for states to sign up to the plan is months away and the political debate remains focused on the dollars themselves - whether there are too many or not enough, and who will pay what.

Ken Boston says the money is needed, but can't alone address the ''social gradient'' in our schools, or turn the system around.

''The money we hope will come with an agreement is a necessary condition for reform,'' he says. ''But it's not a sufficient one - the sufficient condition for improvement is that it's spent on the right thing.''